Light in Data Centers: Marvell Bets on AI

Marvell Technology surprised the market with a strategic move by acquiring the startup Celestial AI for $3.25 billion. Following the announcement, the company’s shares rose about 9% in premarket trading. The acquisition strengthens Marvell’s position in AI infrastructure for data centers by introducing Photonics Fabric technology, which allows data to be transmitted using light between chips and memory, increasing bandwidth, reducing energy consumption, and lowering latency. This positions Marvell as a direct competitor to companies such as Nvidia and Broadcom.

Financial forecasts indicate that Celestial’s technologies could generate $500 million in annual revenue by the end of 2028, reaching $1 billion the following year. With full deployment of the new products, Marvell expects $10 billion in revenue in the next fiscal year, with data center sales projected to grow 20–25% and chip revenues by around 20%.

Photonics Fabric is revolutionizing next-generation data centers by enabling major players, such as hyperscalers, to scale AI systems to very large capacities without excessive energy consumption. It allows data to flow at speeds exceeding 100 terabytes per second within a single CPO module, eliminating bottlenecks during AI model training. This makes Marvell a significant player in AI infrastructure and capable of competing with the largest companies in the market.

Two potential scenarios can be identified in the market. In the optimistic scenario, rapid technology deployment and strong demand from hyperscalers could push MRVL’s stock above $100, especially with Q4 sales projected at $2.2 billion. In the pessimistic scenario, regulatory delays or strong competition from Nvidia and Broadcom could slow growth. Nonetheless, the Celestial AI acquisition aligns with the trend of consolidation in the AI chip market and gives Marvell a chance to regain momentum after a challenging period.

Source: xStation5